Mr Wheatley was speaking at the Association of British Insurers biennial conference yesterday.
He said the industry moved too far towards commercial interest and away from the interest of the consumers.
He said: "Like Icarus, financial services flew too close to the sun in the boom years. They pivoted too far towards commercial interest and too far away from consumer interest. Poor regulation provided an impetus for that fall and market failure."
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As a result, the new FCA will use regulatory features such as thematic reviews, market studies and increased use of judgment. It would also be using more behavioural economics to understand mistakes that consumers make and how firms respond to these.
Mr Wheatley said the "process of repair" to the industry was underway and would rely on both sides doing their bit.
He said: "It is in all our interests to correct the balance now. Good regulation is not a zero-sum game. It's not like a game of tennis or football, where for one side to win the other has to lose. We each have a vested interest in making markets work well for all participants."

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